Zinox Bought Konga for less than $32.4 million, Naspers Documents Show

No one knows how much Zinox Group bought Konga for sure. But from the latest Naspers’ financial statement, there is clarity on that. Naspers made two investments in Konga: $41 million and $13.5 million totaling $54.5 million. In the financial statement, the company noted the following “…disposed of its investment in its joint venture Konga Online Shopping Limited. A loss on disposal of US$38m,…”

During February 2018 the group disposed of its investment in its joint venture Konga Online Shopping Limited. A loss on disposal of US$38m, representing the reclassification of the group’s foreign currency translation reserve from other comprehensive income to the income statement, has been recognised in “(Losses)/gains on acquisitions and disposals”.

Without adjusting for currency fluctuation since Naspers reported its numbers in U.S. dollars, we can say the company received $16.5 million on pure cash basis: $54.5 million – $38 million. From the financial statement, Naspers held about 50.9% of Konga before the disposal. From that, we can calculate how much Konga was sold, and that number is $32.4 million [$16.5M*100/50.9]. So, the maximum possible amount Konga was sold was $32.4 million based on pure cash play from Naspers’ documents.

Source: Naspers

Meanwhile, I do believe that the new Konga is brilliant. It is building a business that would deal with the marginal cost issue. With that it will find success as the integration of atoms and bytes will remain the cornerstone of many entities in Nigeria for years to come.

The key sentence is thus: “Our mid-term goal would see to the establishment of more stores across Nigeria”. Yes, the new Konga would be opening physical stores across Nigeria. Certainly, that is a great winning business model. Besides the money being in the physical space, having stores will reduce the marginal cost challenges associated with pure play ecommerce. The piece quoted me as it argued the brilliance of pursuing this hybrid commerce for Konga.

The number was possibly less than $32.4 million as Naspers could have received preferential and preferred stock as it invested late as a majority investor. I wrote this after reading this which postulated that Konga was sold for $230 million. That is certainly not possible: Zinox would not do such a deal and Konga could not been sold that much.

The old Konga raised about $108 million but struggled with the typical long gestation period of turning profits in ecommerce operations. The core investors gave up!

Imagine if this money had been used to build physical stores in major ten Nigerian cities [Shoprite style], Konga might be a unicorn now. Digital is the future, but we need to thrive today also. And as we move to the web, everyone needs to know that Nigeria has no modern supermarket chain (excluding Shoprite). That may be the opportunity now before the fancy of ecommerce.